WEEKLY WRAP: Major life insurance reform proposal announced

WEEKLY WRAP: Major life insurance reform proposal announced | Insurance Business

WEEKLY WRAP: Major life insurance reform proposal announced
Life insurance reform proposal announced
Major reforms proposed by the life insurance industry have been welcomed by government.

An ASIC report into the life insurance industry found considerable problems and the industry responded with the Trowbirdge report.

The industry has now revealed a “significant reform package,” that will look to abolish commissions as a part of sweeping changes, assistant treasurer Josh Frydenberg said in a statement.

“The life insurance sector is vital for our community. Life insurance advisers and product manufacturers help to provide essential financial security to Australians.

“However, recent inquiries have shown that there is a clear need for reform in the sector.

“A key component of this package is the abolition of the current high upfront commission structure. Under industry proposals, the maximum total upfront commission would fall by more than half the current industry maximum over a transition period to July 2018,” Frydenberg continued.

Frydenberg stressed that the proposed reforms will see benefits for consumers across Australia with better, more effective advice a key component of the changes.

“These proposals are intended to produce significant benefits for consumers,” Frydenberg said.

“This will be achieved through improved quality of advice as a result of a better alignment of interests, more product choice and enhanced competition.

“The proposals have the potential to be the most significant reforms to the retail life insurance sector since the Wallis Inquiry recommendations were implemented in 2001.”

CEO of Suncorp Life, Geoff Summerhayes, stressed that attention needs to be paid to the broader scale of the reforms rather than a focus on remuneration.

“Adviser remuneration has been a hotly debated topic and consumed much of the attention. I recognise that advisers may experience some difficulty in adjusting, but I believe the long-term benefits will make the change worthwhile,” Summerhayes said.

“We need to be putting just as much attention toward implementing an Industry Code of Conduct and simplifying processes and products so they are easier to understand for customers and feature modern-day benefits.

“The full reform package is required to enable a sustainable system and rebuild credibility and trust with our customers.”

Major broker partners up to launch NZ cyber initiative
Marsh New Zealand has launched three new videos about cyber risk in a unique industry collaboration which includes cyber experts from Delta Insurance, KPMG and Connect Smart.

The videos, presented by Marsh’s cyber risk specialty head Xavier Marguinaud, aim to streamline the wealth of information that exists about cyber risk while helping business operators address three key aspects.

These are broken down as:
  1. What is the big deal about cyber risk?
  2. Why should I worry about cyber risk?
  3. How do I minimise cyber risk in my business?
Marguinaud is joined by KPMG partner Philip Whitmore; the director of the National Cyber Policy Office, Paul Ash; and Delta Insurance managing director Ian Pollard who all contribute their expertise in a collaboration that is being described unique for the industry.

Marguinaud and Pollard were both recently recognised for their achievements in the area of cyber risk when they were nominated for the Advisen Cyber Risk Industry Person of the Year in the international category.

“The videos have been launched as part of Connect Smart week - the Government's National Cyber Policy Office initiative to help create awareness around cyber risks in New Zealand businesses,” Marguinaud said.
 
“We appreciate that many people have questions about cyber risk and how they can minimise the risks in their business, and these videos aim to help answer these.”
 
He said Marsh was a silver partner of the Connect Smart initiative, a public private partnership which he believed would help to create positive awareness on an increasingly important risk issue.
 
Pollard said being a Connect Smart partner was a chance to put the company’s wider aim of providing thought leadership into practice.

“We’re actively involved with shaping education, thought leadership and cyber strategy as part of that broader initiative.

“This is one of a number of initiatives we’re working on with other trading partners and bodies; there are many others in the pipeline,” he said.

Communications Minister Amy Adams said this year’s Connect Smart Week had a particular focus on SMEs.

“Small businesses are absolutely critical to our economy and the internet is creating opportunities for New Zealand businesses to sell goods and services all over the world with ease.

“However SMEs often don’t have the resources available to spend on security that bigger businesses do which leaves them vulnerable to online intrusion. Recent reports show 60% of all cyber attacks are aimed at SMEs,” she said, adding that the aim was not to deter people from using the internet.

“It is about empowering New Zealand to use the internet wisely and in an educated way.”

The Institute of Directors is also launching a new course and practice guide for company directors as part of Connect Smart Week.

You can watch the videos here.

United Nations calls on insurers to help shape sustainable future
The secretary-general of the United Nations has called for the insurance industry to play an important role in shaping the world’s sustainable future.

Speaking at a conference in New York Ban Ki-Moon said that the insurance sector is: “Well-placed to be a leader in risk-sensitive investments. As a major source of investment, much of it long-term, the insurance sector can and must play a strong role in shaping a more sustainable future.”

Ki-Moon also said that the industry has risen to meet global challenges before and will have to do so again in ensuring that previous guidelines are met.

“The insurance industry rose to the challenge in last year’s Climate Summit by announcing a commitment to double its climate-smart investment by the end of 2015. We must ensure that commitments made at the Summit are now implemented.”

Ki-Moon urged insurers to work with governments to reduce risks in climate change and disaster impact and also called for the industry to consider the effect of climate change when making investments and noted that insurers have a unique insight into the cost of natural disasters.

“You have seen the tragic human toll rise from extreme weather events,” Ki-Moon said.

“You know the staggering economic price tag. I call on you to show even stronger leadership. Voice your support for an ambitious agreement in Paris.

“Increase investments in resilient, low-carbon infrastructure. And create the innovative financial tools that will make markets work for a safer climate.”